Reforms still pending as taxes go up

The told Spain yesterday that even though it has made major efforts to increase its competitiveness in the industrial sector, it is taking too long to carry out several key reforms. Industrial production is 30% less of Spain's aggregate GDP compared to pre-crisis levels, and weak investment will hinder improvement within the sector.

Fátima Báñez is considering raising Social Security taxes in order to run Spain's retirement system, which is trying to pay the bills. Doing so would increase labor costs for companies and undermine the salary cuts that they have made in order to weather the crisis. Financial recovery and hiring would be delayed even further even though these are top priorities.

Báñez should try to find other options to fix the Social Security deficit and avoid making the same mistake that Moncloa did by raising taxes.